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The Department of Energy's Energy Information Administration (EIA) data
on volume sales is over two months old when it released. The
latest numbers, through mid-January, were published yesterday.
However, despite the lag, this report offers an interesting
perspective on fascinating aspects of the US economy. Gasoline
prices and increases in fuel efficiency are important factors,
but there are also some significant demographic and cultural
dynamics in this data series.

Because the sales data are highly volatile with some obvious
seasonality, I've added a 12-month moving average (MA) to give a
clearer indication of the long-term trends. The latest 12-month
MA is 8.2% below the all-time high set in August 2005. We are
fractionally above the interim low of 8.3% set in December 2012.

The next chart includes an overlay of real monthly retail
gasoline prices, all grades and formulations, adjusted for
inflation using the Consumer Price Index. I've shortened the
timeline to start with EIA price series, which dates from April
1993. The retail prices are updated weekly, so the price series is the more
current of the two.

As we would expect, the rapid rise in gasoline prices in 2008 was
accompanied by a significant drop in sales volume. With the
official end of the recession in June 2009, sales reversed
direction ... slightly. The 12-month MA hit an interim high in
November 2010, and then resumed contraction. The moving average
for the latest month is about 7.9% below the pre-recession level
and 4.8% off the November 2010 interim high. For some historical
context, the latest data point is a level first achieved over
fifteen years ago, in May 1998.

Some of the shrinkage in sales can be attributed to more
fuel-efficient cars. But that presumably would be minor over
shorter time frames and would be offset to some extent by
population growth. For some specifics on fuel efficiency, see the
Eco-Driving Index for new
vehicles developed by the University of Michigan Transportation
Research Institute. However, if we look at Edmunds.com for data
on the top 10 best-selling vehicles,
energy efficiency doesn't seem to be a key factor, to judge from
the percentage of pickup trucks and of SUVs.

While on the topic of fuel-efficiency on gasoline sales, I
continue to recommend a reading of the Polk survey report that
made the rounds in April of last year.

While the selection of hybrid models in the U.S. has more than
doubled since 2007, only 35 percent of hybrid vehicle owners
choose to purchase a hybrid again when returning to market in
2011, according to recent analysis by Polk (See Table A). If
repurchase behavior among the high volume audience of Toyota
Prius owners isn't factored in, hybrid loyalty drops to under 25
percent. [Full Report]

Average Daily Volume Sales Per Capita

The next chart adjusts the 12-month MA of sales volume for
population growth based on the monthly data for Civilian
Non-Institutional Population over age 16 from the Bureau of Labor
Statistics, via the St. Louis FRED repository. What we see here is that
gasoline sales on a per-capita basis are 8.0% lower than it was
at the end of the Great Recession. The gallons-per-capita series
includes the complete EIA data, but since I'm using the 12-month
MA, the red line starts in 1984. We see the double peak in March
1989 (the all-time high) and August 1990. The latest per-capita
daily average is 21.1% below the 1989 high.

What does this analysis suggest about the state of the economy?
From an official standpoint, the Great Recession ended 54 months
before the most recent gasoline sales monthly data point. But if
we want a simple confirmation that the economy is in recovery,
gasoline sales continues to be the wrong place to look.

In addition to improvements in fuel efficiency, the decline in
gasoline consumption is attributable in large part to some
powerful secular changes in US demographics and cultural in
general: